Sarah - I wouldn't bother removing the bits of leaf, the bees will do that. But you can if you'd like to, there's no harm done (as long as you remove last year's and not this year's!). The babies that chewed their way out last year will return to lay new eggs this year.
Re your sister's log: the logs need to be sited in full sun, as, unlike bumblebees, solitary bees don't have hair so they need the warmth of the sun to heat up. So I would guess your sister's is in the shade. If not, perhaps the holes are too big? They need to be between 2mm and 10mm wide, to attract the widest range of bees. They also need to be off the ground, in a sheltered, dry spot. So if your sister's log is not in these conditions I would advise her to move it, and hope the bees find it. The type of plants she grows in her garden could also make a difference. Do you know which plants the bees cut their leaves from in your garden? Does your sister have the same plants? Leafcutters tend to favour rose and wisteria leaves.. so if you have them growing in your garden and your sister doesn't, that could also be a reason.
Kate